Trump’s war dashes hope of rate cut this week
Experts expect the Bank of England and its Governor Andrew Bailey to respond to the effect of war in the Middle East by keeping the interest rate at 3.75%.
The Bank of England is expected to hold interest rates at 3.75% this week as war in the Middle East becomes a major factor.
A reduction in the Bank Rate and a much-needed boost to the housing market, had been anticipated before the conflict started two weeks ago.
Forced up
But now with the UK inflation figure at risk of rising under pressure from oil prices, the Bank’s Monetary Policy Committee (MPC) and Governor Andrew Bailey (pictured) will probably be more cautious in its approach.
Inflation fell to 3% in January from 3.4% in December, but could now be forced up.
And major lenders have been raising their mortgage rates as the war starts to impact the economy.
Big majority
The Bank announces its latest decision on Thursday with a ‘hold’ decision widely predicted. Future rate cuts had been forecasted for later this year, but depending on how long the war lasts this may change.
The Bank’s ratesetters meet again at the end of April and then in June, with economists split on whether there will be an interest rate cut.
But a big majority of economic experts – at 85% – polled by Reuters expect the Bank to hold the rate this week.
Turbulent
Last week, Moneyfacts warned the mortgage market was now becoming as turbulent as it was following the Liz Truss mini-Budget, which saw loan rates jump dramatically.
And leading estate agency Knight Frank said last week the fate of the housing market this year may depend on what US President Donald Trump declares about the war.
Tom Bill, who is Head of UK Residential Research at Knight Frank, claimed the length of the conflict with Iran will dictate the impact on the market.
